Online Discussion: Ethical Malfeasance in Organizations and Whistleblowing

I've read about corporate scandals in the Wall Street Journal and thought, "How can these people be so stupid?" But when you are in those situations and have to make decisions very quickly, it is not as simple as it seems. The CEO's behavior wasn't that bad in the beginning, but it just crept and crept.

Daniel Kim

In early 2007, Cardio-Metric CFO Daniel Kim* confronted CEO Carlos Sanchez for using over $500,000 of company money for personal reasons. Sanchez told him not to worry, claiming that the company owed him such "benefits." Kim urged Sanchez to stop, but things only got worse when embezzling turned to fraud a couple of years later. After much deliberation, Kim decided to inform the board of directors about Sanchez's behavior. Though the board had thanked Kim for bringing the matter to their attention, they quickly accepted all of Sanchez's excuses. To make matters worse, Sanchez retaliated against Kim, making disparaging remarks about Kim's professionalism and character. A few months later, Kim left the company.

In theory, reporting someone for misconduct should be a simple decision followed by appropriate action against the unethical parties, but unfortunatelyand as illustrated in this anecdotethat is not always the case.

To prepare for this Online Discussion, read the excerpt "Ethical Malfeasance in Organizations and Whistleblowing" located in this week's Learning Resources. Then review the following questions and select one for your Discussion posting.

In which type of whistleblowing situation might it be appropriate to go outside the chain of command in reporting concerns about organizational ethics in practice?

Is it ever appropriate to blow the whistle externally before attempting to resolve the problem internally?

Although the public would argue that it wants organizational corruption and unethical behavior to be unveiled, why is the individual reporting such behavior often looked at with distrust or considered to be disloyal?

Why is speaking out (whistleblowing) often honored more in theory than in fact?

Can you think of a situation in which you have been involved in which utilitarianism (the greater good) would support not blowing the whistle on unethical behavior?

*The names in this scenario have been changed to protect the company in which this transgression occurred.